2020 Election: Focus on Healthcare | Lord Abbett
Image alt tag


There was a problem contacting the server. Please try after sometime.

Sorry, we are unable to process your request.


We're sorry, but the Insights and Intelligence Tool is temporarily unavailable

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.


We're sorry, but the Literature Center checkout function is temporarily unavailable.

If this problem persists, or if you need immediate assistance, please contact Customer Service at 1-888-522-2388.

Tracked Funds

You have 0 funds on your mutual fund watch list.

Begin by selecting funds to create a personalized watch list.

(as of 12/05/2015)

Pending Orders

You have 0 items in your cart.

Subscribe and order forms, fact sheets, presentations, and other documents that can help advisers grow their business.

Reset Your Password

Financial Professionals*

Your password must be a minimum of characters.

Confirmation Message

Your LordAbbett.com password was successully updated. This page will be refreshed after 3 seconds.



Equity Perspectives

Here, we take a closer look at the key issues affecting healthcare equities in the 2020 U.S. election.

Read time: 3 minutes

Healthcare continues to be a top political issue for Americans, and the rhetoric around elections has become louder. The Healthcare investment team continues to monitor the political environment and the rhetoric surrounding healthcare policy as the United States gets closer to Election Day (November 3, 2020). 

Here, we will discuss what we see as the three main areas of focus for the various stakeholders in the healthcare system—funding, affordability, and access—and related policy proposals from Republicans and Democrats.


Currently the United States has a public-private system, where employer-funded healthcare coverage, government-sponsored (Medicare & Medicaid), and individually funded health costs are all part of the system. The mix of funding sources has changed over time, as represented in Figure 1, with the share provided by public and private health insurance growing substantially since 1970.


Figure 1. How Healthcare Funding Has Changed in the Last 50 Years

Total U.S. national health expenditure (NHE), 1970 and 2018

Source: Analysis of National Health Expenditure (NHE) data by Kaiser Family Foundation. Public insurance in 1970 includes Department of Veterans’ Affairs, Department of Defense, Medicare, and Medicaid. In 2018, public insurance includes the same categories listed for 1970, with the addition of Children’s Health Insurance Program. “Other” includes third-party payers and programs like worksite healthcare, the Indian Health Service, and other state and local programs.


Under the plans highlighted by both President Donald Trump and former Vice-President Joseph Biden, we believe it is likely this trend will continue. As is typical, these are broad policy positions, and the details of policy implementation will not be known for some time; therefore, it is not easy to get a precise fix on the potential financial implications, though the Biden campaign has suggested an incremental cost of $750 billion. Below are the potential impacts to certain healthcare subsectors from some proposals on the table.  

We see the so-called “public option” as the biggest threat to a subset of Healthcare stocks: Healthcare Provider and Services. The Biden plan is to offer a Medicare-like public option to all individuals, insured or uninsured. This is different from the Medicare-for-All plans the Democrats were discussing in the primaries. In a Twitter post on July 19, 2019, Biden said he is not in favor of getting rid of Affordable Care Act provisions: “I understand the appeal of Medicare-for-All, but folks supporting it should be clear that it means getting rid of Obamacare. And I'm not for that.” The Public Option would impact Health Insurers by providing a potentially competitive product in the marketplace with zero margins. Hospitals would be at risk in this scenario since Medicare rates paid to hospitals do not cover the cost of care, which leads us to a less favorable view of Healthcare Providers and Services.  

Biden has also talked about lowering the age of Medicare eligibility to 60. This would be a positive for Medicare Advantage plans, and potentially commercial health insurance plans, as the membership risk profile improves from having older members being financed by the government. 


Another major concern is the cost of delivering care, as reflected in major pharmaceutical and therapeutic costs, hospital costs (inpatient and outpatient) and cost of coverage (insurance and out-of-pocket costs).  

Both candidates are calling for lower drug prices; however, their approaches are different, with Trump calling for an International Pricing Index (IPI), while the Biden plan would allow for Medicare to negotiate prices and potentially limit new drug prices. There is discussion surrounding the elimination of the rebate model, where a Pharmacy Benefit Manager (PBM) negotiates rebates with pharmaceutical manufacturers based on volume metrics achieved by insurers/employers, which likely would affect PBMs. We believe this is a medium-term risk, as the campaign focuses on coverage rather than drug costs


Finally, both parties are taking a hard look at Americans’ access to healthcare, on both preventive and as-needed bases.  Preventive care can be a method to identify issues prior to their emergence and can include dental care, immunizations, and allergy medications. Ensuring adequate access to therapies could eventually lower costs.

On August 7, President Trump issued an executive order on protecting individuals with pre-existing conditions, even though this provision already exists in the ACA. We think it is safe to say that both candidates support broad access and coverage.  

Overall Outcome and Positioning

As for portfolio positioning, we continue to suggest an overweight in Biotechnology, and Tools and Diagnostics, while we recommend an equal weight in Medical Devices and an underweight in Healthcare Providers and Services and Pharmaceuticals. Within Biotechnology, we tend to focus on targeted therapies intended to address unmet medical needs. In Life Science Tools and Services, we are focused on companies in the bioprocessing space and tools that enable more efficient drug development and discovery.

Medical devices tend to be insulated from healthcare regulatory and policy issues but given the slowdown in medical procedures due to COVID-19, we believe an equal weight is prudent. We have a favorable view of providers of minimally invasive therapies and diabetes treatment devices.


Forecasts and projections are based on current market conditions and are subject to change without notice. Projections should not be considered a guarantee.

This article may contain assumptions that are “forward-looking statements,” which are based on certain assumptions of future events. Actual events are difficult to predict and may differ from those assumed. There can be no assurance that forward-looking statements will materialize or that actual returns or results will not be materially different from those described here.

The information provided herein is not directed at any investor or category of investors and is provided solely as general information about our products and services and to otherwise provide general investment education. No information contained herein should be regarded as a suggestion to engage in or refrain from any investment-related course of action, as Lord, Abbett & Co LLC (and its affiliates, “Lord Abbett”) is not undertaking to provide impartial investment advice, act as an impartial adviser, or give advice in a fiduciary capacity with respect to the materials presented herein. If you are an individual retirement investor, contact your financial advisor or other non-Lord Abbett fiduciary about whether any given investment idea, strategy, product, or service described herein may be appropriate for your circumstances.

The opinions in the preceding commentary are as of the date of publication and are subject to change. Additionally, the opinions may not represent the opinions of the firm as a whole. The document is not intended for use as forecast, research, or investment advice concerning any particular investment or the markets in general, and it is not intended to be legal advice or tax advice. This document is prepared based on information Lord Abbett deems reliable; however, Lord Abbett does not warrant the accuracy and completeness of the information.




Please confirm your literature shipping address

Please review the address information below and make any necessary changes.

All literature orders will be shipped to the address that you enter below. This information can be edited at any time.

Current Literature Shipping Address

* Required field